HG 1616 

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Copy 1 




A NEW SYSTEM 



of 



BamiMinig aimd Credit 



Established by Pooling 
Small Bank Balances 



m a 



Single Joint Account 



(Copyrighted by D. B. Wheeler.) 
1916 '^ 



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SEP 28 1916 



!'CI.A4;37879 
"Ho / , 



Wheeler Industrial Banking and 
Credit System 

(Patent Applied For.) 



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t 



Formed of small bank depositors voluntarily organized into X 
Wheeler Industrial Banking and Credit Association, the object of "^ 
which is to pool their balances by depositing their funds in a " 
joint savings account — convertible into a checking account — the 
aggregate to form a borrowing bank credit available for the ac- J 
commodation of members desiring a loan to make purchases or * 
to cancel obligations. A bank guaranteed investment is pro- % 
vided by the bank affording the members an opportunity to con- ^ 
vert their certificates of deposit into Association Loan Invest- J* 
ment Bonds, taking the place of time deposits and affording a 
higher rate of interest. 

The bank receiving a deposit for the joint account of the asso- 
ciation will issue to the depositor a negotiable interest-bearing 
certificate of deposit, combined with and inseparable from a ^ 
withdrawal order — subject to withdrawal on joint signature of 
depositor and president of the association. The withdrawal order, 
when properly made out, cancels the certificate of deposit and 
serves as a certified check for the face value of the certificate 
plus accrued interest. 

Loans will be made to members by the bank on sufficient cash 
security provided by a guarantee loan fund at the regular 
commercial rate of interest, payable in advance; principal pay- 
able within one year from date of loan in twelve monthly in- 
stallments. T 

Cash security on loans to :^embers endorsed by the association % 
is provided by each member agreeing that 5% of his deposits y 
shall be reserved to establish an association in a Guarantee Loan ♦!♦ 
Fund. The bank in turn shall agree to reserve, out of its earn- % 
ings, an amount not to exceed 3% on all loans made to members J| 
to be credited to a bank guarantee loan fund from J 
which loan investors shall be secured against defaulting % 
loans. If this fund should prove insufficient, the association j 
guarantee loan fund shall be drawn on by the bank without \ 
further authorization. This establishes the credit on a regular 
banking basis within the scope of the banking laws. 

Loan Investment Bonds shall bear interest at 2% additional to 
the interest on certificates of deposit. Applications for loan in- 
vestment bonds must be made to the association, accompanied 
by certificates of deposit to secure payment of bonds when j^ 
issued. Loans will be made at the commercial rate of interest, ^l* 
to the amount of the applications on file, at which time the bond X 
vV'ill be issued and the certificates cancelled. Bonds with accrued % 
interest are payable at maturity by the bank. 4 



ADVANTAGES EXCLUSIVE TO BANKS 

ADOPTING 

THE WHEELER SYSTEM. 



$11,500,000,000 BECOMES AVAILABLE 

as profitable deposits, but is of no value to other banks. 



$15,500,000,000 IN NEW SAFE CREDIT 

is created by the operation of the system, showing a 
return of I 2.45 per cent on investment. 



30,000,000 PEOPLE 

heretofore of very little value to banks as depositors 
become desirable and profitable as such. 



THE LABORER'S ACCOUNT 

with his small balance becomes proportionately as valu- 
able as that of the railroad president. 



LITERAL TRUTH IN ADVERTISING 

from an almost inexhaustible fund of facts, offering 
advantages to depositors impossible to other banks. 



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THE MIRACULOUS PITCHER 

Modernized Becomes 
THE MIRACULOUS DOLLAR 

After being all spent to live on, 43c more may be spent 
from the same dollar. 

A POOR MAN'S $1.00 

WILL BUY $1.43 

worth of goods if deposited in the 

Wheeler Industrial Banking and Credit Association. 

This is how it is done : 

John Thrift receives his month's wages of $60, gives Mrs. 
Thrift $10 for living expenses and deposits the remainder. 





Deposits. 


Draw. 


Balance. 


Bal. for Equal. 

7 days. - 


Jan. 1 


$50 




$50 


$50 $350 


c. 7 


— 


$10 


$40 


$40 $280 


*• 14 


— 


$10 


$30 


$30 $210 


" 21 




$10 


$20 


$20 $140 


" 30 




$20 to 


pay rent 


30 days. .$980 


Averaere 


dailv bank balance for month. 


$32.66 



1,000 such accounts ^establishes $32,660 daily balance. 
Under this system 95% of bank receipts are available for 
investment; this establishes a borrowing bank credit of 
$31,027. 

John Thrift establishes $31.02 of that sum. Mrs. Thrift 
wants a phonograph, so John borrows $31.02 from the bank, 
pays the interest of 6% in advance^ — which is $1.86 — re- 
ceiving from the bank $29.16 with which he buys the in- 
strument. 

What has happened is — 

John received $60 the first of the month; used it all to 
live during the month, still he could make a purchase of 
$29.16 worth of goods. 

He has but $2.43 to pay each month, saving about 100% 
on the purchase by reason of having the cash to pay in- 
stead of installments. 



HERE'S A MYSTERY! 

A man borrows $72 and pays only 6% per annum or $4.32 
for the use of it. The bank lending it gets $7.49 for the 
use of it with $3.80 still due on the transaction. 

This is how it is done: 

Loan of $72 with interest paid in advance and principal paid back in 
12 monthly installments of $6 each. 



Date 

1-1 Loan of $72 $72.00 

Interest on $72 4.32 

Re-loan 4.32 



Total Receipts. 
Int. on loan $4.32 



2-1 Payment 


on $72 

4.32 


6.00 
.36 








Interest 


on 4.32 


.25 


Int. 


on 


$4.32— .2591 


Re-loan 


6.61 


6.61— .36355 


3-1 Payment 


on $72 

4.32 

6.61 


6.00 
.36 
.55 








Interest 


on 6.61 


.36 


Int. 


on 




Re-loan 


7.27 


$7.27— .3635 


4-1 Payment 


on $72 

4.32 

6.61 

7.27 ____ 


6.00 
.36 
.55 
.60 








Interest 


on 7.27 


.36 


Int. 


on 




Re-loan 




7.87 


$7.87— .35415 


5-1 Payment 


on $72 

4.32 


6.00 
.36 










6.61 

7.27 

7.87 


.55 
.60 
.65 








Interest 


on 7.87 


.35 


Int. 


on 




Re-loan 


8.51 


$8.51— .3404 


6-1 Payment 


on $72 

4.32 

6.61 ____ 

7.27 ___. 

7.87 

8.51 


6.00 
.36 
.55 
.60 
.65 
.70 








Interest 


on 8.51 


.34 









Due end 
of year 



.03305 



.0727 



.11805 



.1702 



Re-loan 9.20 



Int. on $9.20— .322 



.23 



7-1 Payment 


on 


$72 __ 




6.00 




« 


" 


4.32 




.36 




t 


" 


6.61 




.55 




1 


" 


7.27 





.60 




' 


« 


7.87 





.65 




» 


<< 


8.51 





.70 


" 


'* 


9.20 





.76 


Interest 


on 


9.20 


""'1 


.32 


Re-loan 


9.94 


8-1 Payment 


on 


$72 __ 




6.00 






" 


4.32 




.36 






" 


6.61 




.55 




" 


" 


7.27 





.60 






{f 


7.87 





.65 






" 


8.51 





.70 






<< 


9.20 





.76 


" 


<i 


9.94 




.82 


Interest 


on 


9.94 




.29 


Re-loan 


10.73 


9-1 Payment 


on 


$72 __ 




fi.OO 




< 


" 


4.32 





.36 




' 


" 


6.61 





.55 




' 


" 


7.27 




.60 




* 


it 


7.87 





.65 




' 


" 


8.51 





.70 




' 


" 


9.20 





.76 




' 


" 


9.94 





.82 


" 


" 


10.73 




.89 


Interest 


on 


10.73 


- 


.26 


Re-loan 


11.59 


0-1 Payment 


on 


$72 __ 




6.00 


" 


" 


4.32 




.36 


" 


" 


6.61 


---V 


.55 


'( 


" 


7.27 





.60 


« 


« 


7.87 




.65 


<( 


(( 


8.51 




.70 


« 


" 


9.20 




.76 


" 


" 


9.94 





.82 


" 


" 


10.73 




.89 


" 


" 


11.59 





.96 


Interest 


on 


11.59 


- 


.23 


Re-loan 


12.52 


1-1 Payment 


on 


$72 __ 




6.00 


•« 


" 


4.32 





.36 


" 


" 


6.61 





.55 


" 


" 


7.27 





.60 


" 


'•' 


7.87 





.65 


" 


" 


8.51 




.70 


" 


" 


9.20 




.76 


" 


" 


9.94 





.82 


" 


<( 


10.73 




.89 


" 


" 


11.59 




.96 


" 


" 


12.52 




1.04 


Int€ 


jrest 


on 


12.52 





.18 



Due end 
of year 



Int. on $9.94— .2982 



.2982 



Int. on 10.73— .26825 



.37555 



Int. on 11.59— .2318 



.4636 



Int. on 12.52— .1878 



.5634 



Re-loan 



13.51 



Int. on 13.51— .1351 



.6755 



Due end 
of year 



12-1 



Payment on 


$72 __ 


6.00 




« . 




4.32 


____ .36 




., 




6.61 


____ .55 




<< . 




7.27 


.60 


1 


" < 




7.87 


__- .65 




" 




8.51 


.70 




« . 




9.20 


.76 




u ' 




9.94 


.82 




" ' 




10.73 


___- .89 




" 




11.59 


-__- .96 




«• , 




12.52 


1.04 




" * 




13.51 


1.12 




Interest c 


)n 


13.51 


____ .13 




Re-loan _ 


14.58 Int. on 14.58— .0729 


.8019 








$7.49675 


$3.80215 








$72) $7.49675 





.1041 per cent gain. 

In this problem as figured, reinvestment of the smaller amount 
of interest is not carried out. This accounts for the dilterent result 
of .1245 per cent obtained by figuring the same problem by the bank 
balance method, which is as follows: 

The same problem loan account figured out by the method by which 
daily bank balances are figured, shows as follows: 



Equal to 



ming $67.68 


1st 


61.68 


2nd 


55.68 


3rd 


49.68 


4th 


43.68 


5th 


37.68 


6th 


31.68 


7th 


25.68 


8th 


19.68 


9th 


13.68 


10th 


7.68 


11th 


1.68 


12th 



month. 



12) $416.16. Equal to loaning $416.16 for 1 month. 
$34.68 • 34.68 " 1 year. 



$34.68) $4.32 

.1245 per cent gain. 



INDUSTRIAL BANKING 

AND 

CREDIT 

Up to the present time, modern banking has failed to 
devise a means of making small withdrawal accounts profit- 
able, and but a small percentage of the incomes of the thirty 
millions of people working for a living has become bank 
deposits. Little or no inducement could be offered to them 
to become depositors, as the balances of quite a number are 
too small to be of any profit to the bank. 

The following estimate, taken from the latest statistics, 
shows the immense amount of new, sound bank credit created 
for profitable investment and the vast sum of money brought 
into bank use by the Wheeler System : In 1910 thelct were 
employed in the manufacturing industries six and one-half 
millions of wage- workers with an average wage of $518 
per annum. Thirty millions of people were engaged in 
gainful occupations; fifteen and one-half billion dollars in 
wages v/ere earned annually. This is about four times all 
the accumulated deposits in savings banks. 

This estimate shows about $155 to be the average an- 
nual wage per capita. The average wages of any city can 
be readily ascertained by multiplying 155 by the popula- 
tion. 

The total accumulated deposits in savings banks, accord- 
ing to the report of the Comptroller of the Currency, is 
about four billion dollars; deducting this from the total 
annual wages of the working people, leaves eleven and one- 
half billion dollars available as profitable bank deposits, 
offering under the Wheeler System inducements to the de- 
positors heretofore impossible. 

The Wheeler System enables the bank to offer to this 
large body of wage-earners a banking service and the 
benefits of a borrowing bank credit — AT A PROFIT OF 
121/9 PER CENT! 

The granting of loans to persons without property or the 
usual security is made possible by, and depends entirely up- 
on, the safety of the loan investment. To the class of people 
having no comimercial assets, cash is the only security pos- 
sible, and this cash security is provided by establishing a 
Guarantee Loan Fund made up of a small pro-rata amount 
of the deposits of each member and supplemented by a 
percentage from the earnings on loans. The small probable 
losses are met by that part of the guarantee loan fund 
coming out of the earnings on loans; in case this is found 
insufficient, the guarantee loan fund contributed by the 
members is drawn on, making any default in the joint 
credit impossible. This distribution of the small losses 



among a large number of people who assume their pro-rata 
share makes the individual loss too small to be felt. 

The association guarantee loan fund is that part con- 
tributed by the members agreeing that 5% of their deposits 
shall be reserved for this fund as long as is deemed neces- 
sary by the bank to pay defaulting loans. That part of 
the guarantee loan fund coming out of the earnings on 
loans is established by the bank reserving an amount not 
exceeding Sy< on loans made to members. It is from this 
that the guarantee loan fund is largely, if not entirely 
maintained. It is necessary for this fund to be in the 
custody of the bank which has a sound commercial reputa- 
tion to give assurance that it will be faithfully applied to 
the liquidation of defaulting loans. Therefore the bank 
guarantees the credit extended to members on the cash se- 
curity provided by the members jointly in the guarantee 
loan fund. 

In the operation of this system there are two diverging 
interests: The bank and the pooled interests of the de- 
positors. The association must, therefore, have a represent- 
ative to administer and represent it as an executive in 
the transactions with the bank. 

The certificate of deposit identifies that part of the de- 
posit belonging to each depositor, dispenses with and 
takes the place of an account with the depositor. It pre- 
computes the interest, is negotiable, and when negotiated 
becomes the same as a certified check, which any merchant 
would accept. At the same time it takes the place of the 
pass-book in preserving the savings-account feature of de- 
posits, keeping them under the 5% bank reserve, which 
leaves 95% for investment. There is no possibility of over- 
draiving on an account, noi' are there any erroneous checks 
to contend ivith. 

Receiving or paying deposits requires no more time or 
work than a checking account. In making deposits, the 
depositor has the blanks bound the same as a check book, 
from which he makes out a certificate of deposit for the 
amount he wishes to deposit, at the same time making 
out a regular deposit slip; the receiving teller files the 
slip as usual and signs the certificate of deposit, which is 
left in the book. Payment of the withdrawal order is the 
same as the payment of a check. 

The loan-investment bond is adopted to afford a higher 
rate of interest to those who do not need to draw on their 
funds for immediate use — the most provident of savers who 
do not anticipate they will ever need a loan but are at- 
tracted solely by an opportunity for higher interest. The 



bond serves another purpose in distributing the loans among 
depositors in varying small amounts, as per example: A, 
B and C having $20, $30 and $50 respectively, which they 
wish to convert into loan-investment bonds, file applications 
and indorse their certificates of deposit to the bank. They 
are kept until an application for a loan covering the amount 
is indorsed, at which time the certificates are canceled and 
bonds issued in lieu thereof; thus the application keeps the 
bond from being issued until an investment is provided to 
pay the increased interest. 

In extending loans of this character, it is necessary to 
divide the payments into installments, otherwise the bor- 
rower could never repay. Having the interest prepaid, and 
the installments for re-investment, materially increase the 
earnings of the bank. 

It is well known that many banks, in seeking depositors, 
advertise liberal inducements to attract depositors which 
they cannot literally carry out. Certain restrictions — not 
appearing in the advertisements — are necessary to make 
the account profitable. This brings disappointment to the 
depositor in not getting what he expected, while the bank 
gets many accounts on which the daily balance is too small 
to pay to carry the account. 

The facts from which to draw for advertising propaganda 
are almost unlimited, and keep this end of the business 
out of the stereotyped rut by giving the advertising the 
novel feature of being both unusual and literally true. 
The loan feature is of such importance that no wage-earner 
can afl^ord to stay out. Such credit as has been available 
to him has been based on a gambler's chance, where pos- 
sible losses were well covered by excessive charges in in- 
terest, commissions, etc. The big profits to the bank and 
the saving efl^ected hy the simplicity in operating the sys- 
tem, make it possible for the bank to offer as big an inter- 
est on withdrawable deposits as is usually ofi'ered on time 
deposits, and on time deposits it can offer a bigger in- 
terest than has ever before been offered by a bank. 

The scope of this system is necessarily national, and the 
trade-mark adopted gives it an identity known universally. 
The trade-mark is designed to show and typify its basic 
construction and accomplishment; the wheel signifies in- 
dustry; the hub the single joint bank account; the spokes 
the deposits forming it ; the rim encircles and joins all into 
a complete whole; the bank credit established by the pool 
is represented by the rim and cogs which move the wheels 
of industry. 

This is a means of making the whole nation familiar with 
the system, and will command public confidence and be- 
come an asset in good will to any bank using the sys- 
tem. 




WlT-sef! 



HAYWORTH PUB. HOUSE. WASH.. D. C. 



